Startup patents don't fail. Patents fail startups. The reason for this is simple: startups are different from "grown up" companies, and this means that patent strategies used for them also need to be different. 

Established companies have products and customers. Since they already have customers, they likely have a pretty good idea how to serve them with new and improved products. "A startup is a temporary organization formed to search for a repeatable and scalable business model," as stated by Steve Blank, a thought leader in startup business processes. While established companies are incentivized to develop their products in closed systems, the opposite is true for startups. Put simply, startup leadership has to "get out of the building" and talk to customers. Unless and until the startup has a validated customer that is scalable, the company does not exist as a going concern. And, without customer confirmation that the startup is developing a product from which sustainable revenue will flow, there is no reason to file a patent application. 

Startups can be expected to pivot multiple times before they become "grown up" companies. This means that any patent applications that are filed must be comprehensive enough to follow these eventual pivots. Notably, the pivot doesn't mean that the technology will change; rather, the pivots result from application of a core technology offering into adjacent markets. This means that the patent application will not address "design arounds" as is the goal with traditional patent advice. By including market optionality in startup patent filings, the startup can go where the customer takes them and obtain patent coverage that aligns with the products for which actual revenue can be realized. 

Also, the typical focus on "protecting a product" is wrong for startups. A startup does not--and cannot--deploy a business model which diverts revenue needed for product development and customer validation to pay legal fees. Few rational investors would put money in a startup that was going to be allocated to supporting a law firm. Put simply, a startup that is thinking about patent litigation is destined for failure. Since established companies have products that they are delivering to customers, it likely makes sense to enforce a patent against competitors in order to preserve the revenue stream. Patents  can nonetheless provide considerable business value to startups for reasons such as enabling strategic partnerships, generating licensing revenue, and enhancing exit value. 

Unfortunately, most traditionally experienced patent experts have no clue how to adjust their advice to address the unique needs of startup companies, which means that their clients are likely obtaining patents that do not align with their business strategies. And, a patent that does not align with business strategy is worthless. In other words, the patent fails to create value for the startup. 

In this first episode of Season 2 of Winning with Patents (and IP), Jackie Hutter explains why Patents Fail Startups and provides examples of validated patent strategies that have worked for real startups.  

Show notes: 

Steve Blank on Startups

Eric Ries on Lean Startup Principles

Jackie Hutter on Why Traditional Patent Advice Harms Modern Startups 

"If all you have is a hammer, then everything looks like a nail," is an old saying can be applied to asking a patent professional whether you need to get a patent. All too often, someone will be convinced that their company needs a patent, when going this direction will not create business value. Even worse, getting a worthless patent will also divert resources that could be spent elsewhere in the company.  Here's a novel approach for some: not getting a patent is, in fact, a "patent strategy" if you make the decision for articulated business reasons. Patents are only relevant if they are aligned with a company's business strategy. But, just because a patent is not right for your company, does not mean that the company does not need IP. To the contrary, there is always some form of IP--or more broadly--intangible assets that are crucial to a company's desired financial outcomes. While patents may be the type of intellectual property that gets the most attention, for many companies, other forms of IP, such as trademarks, copyrights, and trade secrets, can create vastly more business value than a patent ever could. In other cases, the more general category of "intangible assets" defines how a company will achieve financial returns. In this episode, listeners will be introduced to a business-focused approach to thinking about using non-patent forms of intellectual property and intangible assets, some of which may be new concepts when presented in the context of business value creation. If a business does not know where to look to find intangible value, that value cannot be protected and, if it cannot be protected, it cannot be realized. 

"Proper patent planning prevents piss poor patent performance." In other words, if you do the work on the front end, the outcome is virtually guaranteed. Patents are no different. This episode provides listeners with an overview of how my clients obtain broad, business relevant patent protection almost all the time that we work together to draft, file, and prosecute a patent application along with our outside counsel team. This almost 100% success rate for my clients is vastly different than the typical 5% or fewer of patents having strategic value. There are several necessary steps required to make this happen, and successful execution requires that both the business and IP teams to approach things differently than in conventional patent development efforts. The threshold requirement is that what is to be protected is an innovation--that is, the subject matter is for a solution to a customer problem, where the customer has been validated to exist. There are then 4 crucial elements to obtaining broad protection for the subject innovation: 1) identify the one or more customer value propositions that are relevant; 2) search for and characterize the prior art to identify a framework for protection; 3) create strategically relevant claims with "non-limiting" limitations; and 4) develop a strong and compelling story to support the fact that you are entitled to the broad claims that you seek in your application. As an added benefit, when one does the hard work up front, it is much less likely that the patent examiner will be able to reject your application multiple times, and your patent application will issue more quickly and at lower overall cost. 

A common refrain in business is "if it can't be measured, it can't be managed." This is true for patents and intellectual property efforts. However, it is rare that an IP professional will be held accountable for her efforts by the business leaders who are themselves accountable to the company's stakeholders. IP rarely matters, but when it matters, it matters a lot. If a company needs broad and robust protection to achieve its identified business goals, the failure of the IP team to generate this protection will result in the business outcome not being met. In other words, the IP failure will equal a business failure, and this needs to not only be measurable, business leadership needs to be able to manage such knowledge to prevent IP failures in the future. This episode introduces listeners to the need to define and track these intended business outcomes so that they can not only hold their patent and IP teams accountable, but also so they can make improvements in their IP strategy processes. 

The subject matter of a patent application is no doubt the most important question after an innovator, entrepreneur, or business leader decides that they need to move forward with obtaining a patent in order to generate their desired business outcome. However, very little time is spent on deciding what the patent application should, in fact, cover in order make it likely to achieve this outcome. As will be discussed in this episode, for many companies, the last thing that they should work to protect is "an invention," at least because the customer does not buy an invention, she buys a solution. This episode provides an illustration of how a company failed to prevent competition in its breakthrough innovation because it protected, albeit broadly, the product that it created after a long product development process--that is, "an invention." Listeners are also introduced to the concept of protecting the value provided to the customer from a product or technology using solution-directed patenting strategy.    

For people who have focused patent protection on "an invention" (and this is just about everyone), framing of coverage in terms of the "customer solution" may seem like an abstract concept. Importantly, however, no problem is every new, it's just new to you. In this episode, listeners are shown how Procter & Gamble's successful patenting strategy effectively kept competition in its breakthrough (for that time) Swiffer Wet Jet(R) mopping system at bay for many years. This real-life and likely familiar example will help innovators, entrepreneurs, and business leaders who seek to do a better job in generating value from their patenting efforts by ensuring that they can obtain patent protection that does not merely protect the product that they are selling to their customers, but also the value that the customer is being provided.  

In Episode 1 of Season 1 of Winning with Patents and (IP), we set out a new framework for the process of generating patents and other forms of intellectual property that are aligned with the desired business outcomes of your company. By "flipping the script" to put the focus on why your business needs IP prior to moving forward with the IP generation process, it is much more likely that any patents that you obtain will actually matter. Notably, it is likely that 5% or fewer of patents actually encompass strategically relevant protection; it follows that there is a whole lot of room for improvement. This episode is intended to help listeners gain awareness--perhaps for the first time--that patents and intellectual property are issues that must be managed first as a business issue, and only when the business relevance is determined, does it make sense for an entrepreneur or innovator to spend the money with an IP professional.